Sierra Club says Prairie State Energy investments could cost cities

Tuesday

Sep 25, 2007 at 12:01 AMSep 25, 2007 at 2:58 AM

The Sierra Club has sent letters warning 240 communities across the Midwest — including 30 in Illinois — to pull out of their investments in a coal-fired power plant in southern Illinois or risk paying the cost of tougher clean-air rules down the road.

Tim Landis

The Sierra Club has sent letters warning 240 communities across the Midwest — including 30 in Illinois — to pull out of their investments in a coal-fired power plant in southern Illinois or risk paying the cost of tougher clean-air rules down the road.

Supporters, meanwhile, are going ahead with plans to break ground next week for the $2.9 billion Prairie State Energy Campus. They portrayed the letter as the latest effort by environmentalists to stall a project approved by regulators and upheld by the courts.

Chatham, which would buy the power through the Illinois Municipal Electric Agency, is among communities targeted by the letter.

““I understand why municipalities see the allure of actually owning a piece of the plant … but this will open them up to a whole new set of risks,” said Becki Clayborn, regional representative for the Sierra Club in Chicago.

The Sierra Club letter went out this week to city council members in Illinois, Indiana, Kentucky, Ohio and Missouri. Peabody has commitments from municipal electric agencies in the states for 95 percent of the plant’s power output.

Peabody Energy plans to break ground Monday at the site just southeast of St. Louis. The plant would begin generating power in 2011.

The letter says Peabody expects to finalize the power-purchasing contracts Monday. Clayborn said if the communities go through with the plan, municipal electric customers would pay the inevitable cost of federal or state limits on carbon dioxide emissions from the plant.

There are no federal or state limits on carbon dioxide emissions linked to global warming, though the U.S. Supreme Court ruled early this year that CO2 should be treated as a pollutant, and such standards are widely anticipated.

The general manager and CEO of the IMEA, which represents the 30 Illinois municipalities, said he considers Prairie State Energy a good investment in clean-coal technology and long-term energy supplies.

“This train already has left the station,” said Ronald Earl.

He said the group just completed selling $605 million in bonds toward the purchase of a 15.17 percent ownership in Prairie State Energy. Power purchase contracts in the agreement run from 2011 to 2035.

Chatham director of utilities Del McCord said village officials there stand by the IMEA investment.

“It’s a great project. I think the Sierra Club is just not for coal-fired plants,” said McCord.